Around 150 agreements and 900 decisions on various customs issues have been
adopted since the inauguration of the Customs Union of Russia, Kazakhstan and
Belarus. The legislative framework of the Customs Union (CU) comprises the CU
Customs Code, federal laws of the CU member states dealing with customs matters,
and regulatory legal acts of national legislative and executive authorities. At
the same time, it should be noted that the judicial and enforcement practice is
not entirely consistent. This has led to a significant increase in cases before
the Court of the Eurasian Economic Community, which also contributes to the
enforcement practice through its decisions.
The expansion of the legislative base is taking place alongside an
increase in the functions of customs authorities with respect to controls after
the release of goods, an extended statute of limitation for administrative
liability (from one to two years) and an extended period of control after the
release of goods (from one to three years).
As these changes may create risks in relation to a company's foreign trade
activities, as well as be source of missed opportunities, it is more and more
important for companies to get a customs compliance to verify compliance with CU
customs legislation.
Companies carrying out foreign economic activities should choose one of
the following strategies to manage the above-described risks and missed
opportunities:
Set up a customs processing and/or logistics department within the company
Set up a customs processing and/or logistics department within the company,
and in parallel periodically engage professional advisors to check compliance
with CU customs legislation
Outsource customs functions (engage a customs representative/broker),
instead of functional departments within the company, and regularly engage
professional advisors to check compliance with CU customs legislation
Engaging professional advisors helps minimize the risk of a CU customs law
violation, determine opportunities to use customs relief (including for payment
of customs duty, VAT), and test the effective functioning of internal procedures
and controls.
A customs compliance check might, for example, detect the following risks:
Purchases of goods imported into the CU contrary to CU customs law
requirements
Main sources of risk: (1) no procedure for checking customs risks relating
to foreign manufactured goods purchased from Russian suppliers in the RF; (2)
insufficiently effective supplier selection procedure.
Worst case scenario if detected by customs authorities: (1) initiation of
an administrative case against the company under article 16.21 RF Administrative
Offenses Code for the unlawful use of goods or purchase, storage, or
transportation thereof. The administrative fine ranges from 50% — 200% of the
value of the goods; (2) payment of customs duties and import VAT. If the company
refuses to pay the customs payments, the customs authorities will confiscate and
sell the goods. After payment of the outstanding customs payments, the balance
of the proceeds will be returned to the company
The customs value of imported goods is wrong due to the incorrect
inclusion of additional expenses such as: insurance, loading/unloading/transshipment,
license fees
Main sources of risk: (1) insufficient control over customs
representatives/brokers; (2) unclear descriptions in the contract of the
transaction price structure and obligations of the parties with respect to the
cost of international carriage, insurance; (3) improper application of methods
for accruing and including license fees in the customs value of goods
Worst case scenario if detected by customs authorities: (1) adjustment of
the customs value and recovery of customs payments; (2) initiation of an
administrative case against the customs representative/broker or company under
part 2 of article 16.2 RF Administrative Offenses Code for false declaration of
customs value. The administrative fine ranges from 50% — 200% of the amount of
customs duties and import VAT payable; (3) initiation of an administrative case
against the company under article 16.7 RF Administrative Offenses Code for the
submission of invalid documents. The administrative fine ranges from 100,000
rubles — 300,000 rubles per customs declaration. The following failures to
comply with CU customs law do not create risks, but may result in missed
opportunities:
Classification of identical goods with different codes according to the
CU's Foreign Economic Activity Commodity Classification
Making deposits to secure customs payments when temporarily importing
reusable containers with full relief from customs payments. A conservative
approach to exporting defective goods during the warranty period (the export
customs procedure is applied, followed by release for domestic consumption)
In light of the above, a customs compliance check is a requirement of the
times.
It enables the implementation of several strategies to secure the
company's foreign trade functions. It is recommended to engage professional
advisors to carry out such a check.